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Feb employment growth expected to be weak

Jason Cadden

Jobs growth in February is expected to have bounced back after a weak result in January, but not enough to bring down the unemployment rate.

Official labour force figures to be released on Thursday are expected to show the number of people with jobs rose by 10,000 in February, after a surprise fall of 3,700 in January.

The unemployment rate is forecast to stay steady at six per cent, after hitting the 10-and-a-half year high in January, an AAP survey of 13 economists shows.

Employment growth will still be quite weak, despite some recent positive economic data, ANZ head of Australian economics Justin Fabo said.

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"On balance, we expect employment rose very modestly in February but are looking for an unchanged unemployment rate at six per cent," he said.

"Forward-looking indicators point to at least a modest improvement in employment.

"Firms are still reportedly a bit hesitant to increase staffing levels and want to see confirmation that improving demand will persist."

On Friday, Reserve Bank of Australia governor Glenn Stevens told a parliamentary committee that he expects the unemployment rate to peak a little above six per cent this year.

He added that employment growth lags behind rises in economic growth, which the RBA forecasts will soon pick up and get above three per cent.

"Unemployment will rise further; I would hope not too much further," he said.

JP Morgan Australia chief economist Stephen Walters said the unemployment rate staying at a decade long high won't be a surprise to the market.

"The shock factor has apparently been removed from the labour market data by the fact that the RBA expects further deterioration," he said.

"For the February labour force survey the employment outcome should be at least a little stronger, as we have had more encouraging news from the firm level on overall hiring intentions over the past few weeks," he said.

"While not enough to absorb population growth, this would still, believe it or not, beat 75 per cent of monthly reads over the last 12 months."

The participation rate - the percentage of the working age population either in work or looking for a job - is expected to stay steady at 64.5 per cent in January.